Winning By Not Losing

Winning By Not Losing

October 07, 2022

It does not come as a shock to anyone to know that the broader markets have been down for practically the entire year. Our accounts are down as well but not nearly as bad as the market in general. As has been stated in previous letters and e-mails, the market does correct from time to time.  On several occasions, I have sent a report by Legg Mason, a global asset management firm, illustrating that going back to 1937 the market is up approximately 76% of the time. We also know that odds are highly probable since WWII that a double-digit return is very likely after periods of correction. Many will say, oh, but this time is different.  As investors, we have said this during every correction, how times are different, and markets will not recover.  Wrong again!! History would beg to differ. The market has not only bounced back but gone on to post new all-time highs. Every time!! The stock market, going back many years, has historically been a very good investment.  We as investors must be patient and realize that history is on our side. Soon this correction will be a distant memory just like all the others that have proceeded it.


There is an old Chinese proverb that states, “There are many paths up the mountain, which simply means there is more than one way to achieve our financial goals. This is as true with investing as it is in life. Our objectives are to deliver above-average positive returns with downside protection while experiencing low volatility.


When managing money, our money managers use a quantitative analysis which means using strategies that rely on computer models, hard data, and programmatic algorithms. Layered over the top of the quantitative analysis is a discretionary investment approach, or human interpretation of various data points used to make investment decisions based upon real time events.


While we don’t want to ever experience losses in our accounts, the way we manage your money will explain why your account is down less than the market. By comparison, the market is down approximately 25.26% when averaging the Dow, S&P, NASDAQ and Russell 2000 since the first of the year as of the writing of this letter.  Compare your returns to those of the stock market.  I think you will be able to verify the value of our services.


Managing your money is our investment philosophy of winning by not losing.” If we can avoid significant drawdowns in the market, we believe we can provide a less volatile and consistent investment result over time. Your account is 80% in cash, with some exposure to energy (10%) and commodities (10%). We believe these sectors still show promise of making money in the near future. While our system is not perfect, no one’s is.  We feel it is the very best in the market today.